Media
Statement by Yeo Bee Yin, State Assemblywoman for Damansara Utama on Friday 11
March 2016 in Petaling Jaya.
I read with great concern Petronas’ press statement dated 29 February
2016, where it announced that the profit-after-tax recorded by the national oil
company in 2015 is RM21 billion[i], which
was 56% lower than the year 2014. The drop in profit for Petronas was not
unexpected as we have seen crude oil prices falling by 75% in the past 18
months; from USD 110 per barrel to its lowest record since 2003 at USD 27 per
barrel, and before it rises again and hovers at USD 35 per barrel.
What concerns me is the fact that with such poor earnings, Petronas may need
to tap into its reserve to meet its 2016 RM 16 billion dividend commitment to
Putrajaya[ii]. It
should be noted that even at the height of 2008's economic crisis and its
aftermath, Petronas' dividend paid to Putrajaya was still lower than what it
earned, with dividend payout at 39.3% in 2008, 57.1% in 2009 and 74.4% in 2010.
Since Najib took the helm of the country in 2009, he has been enjoying
the good years of high oil price. His government has collected a total of RM426
billion from 2009 to 2014 from Petronas in the form of dividend, taxes, cash
and export duties (breakdown is shown as table below) to a total of RM 74
billion in 2009, RM 57.6 billion in 2010, RM 65.7 billion in 2011, RM 80
billion in 2012, RM 73.4 billion in 2013 and RM 75.3 billion in 2014.
Year
|
Dividend
|
Taxes
|
Cash
|
Exports Duty
|
Annual Contribution
|
2009
|
30
|
29.4
|
12.4
|
2.2
|
74
|
2010
|
30
|
18.7
|
8.3
|
0.6
|
57.6
|
2011
|
30
|
25.1
|
9.3
|
1.3
|
65.7
|
2012
|
28
|
38.3
|
12.5
|
1.2
|
80
|
2013
|
27
|
33.3
|
12
|
1.1
|
73.4
|
2014
|
29
|
32.5
|
12.6
|
1.2
|
75.3
|
Total
|
174
|
177.3
|
67.1
|
7.6
|
426
|
* all in RM billion.
Although he has only been Prime Minister for a mere 15% of Petronas' 42
year-long establishment, his government has collected around 50% of Petronas'
cumulative contribution to Putrajaya since its inception in 1974 until 2014 of
RM881 billion. However, how have these oil contributions translated into
tangible benefits to the people on the street? What we see now is a bloated
budget at Putrajaya while Malaysians are suffering from heavier tax and massive
subsidy cuts across the board!
With crude oil prices likely to stay low for a period of time as
predicted by economists around the world, Petronas may need to continue to tap
into its reserve to pay dividend to Putrajaya to sustain its bloated budget if
nothing is done.
What worries me more was how will Malaysia fare if an economic crisis
hit now? In 2008, the
economic crash was accompanied by the surge in oil price, of which Petronas
benefited with increased profit. Therefore, it was able to help in cushioning
the country’s economy in the midst of economic shock. Unfortunately, the
situation is not as such now. Malaysia will most
likely face the looming economic crisis at low oil prices. If so, how much help
can Petronas afford before it becomes unsustainable itself?
It is crucial
for Putrajaya to be prepared to face pro-long period of low oil prices and an
economic crisis. It must run a much lean government to to avoid killing the goose
that lays the golden eggs for our country to persevere the interests of our next
generation.
This period of low crude
oil prices should serve as a timely wake-up call for Putrajaya and our country
to move beyond oil economy. Malaysia must recover from Dutch Disease before it
kills us as a nation.
[i] http://www.petronas.com.my/media-relations/media-releases/Pages/article/PETRONAS-PERSEVERES-THROUGH-A-DIFFICULT-2015,-.aspx
[iii] http://www.petronas.com.my/investor-relations/Documents/annual-report/AnnualReport_FinancialStatement_2011.pdf
[iv] http://www.petronas.com.my/investor-relations/Documents/Annual%20Report%202014.pdf
